2011 NBCA 60, 2011 NBCA 60

COURT OF APPEAL OF NEW BRUNSWICK 80-10-CA 81-10-CA SNC-SNAM, G.P., a partnership between SNC- LAVALIN INC. and SNAMPROGETTI CANADA INC. (Applicant) APPELLANT SNC-SNAM, S.E.N.C., société en nom collectif ayant comme associés SNC-LAVALIN INC. et SNAMPROGETTI CANADA INC. (Requérante) APPELANTE - and - - et - OPRON MARITIMES CONSTRUCTION LTD. and ICS STATE, A DIVISION OF THE STATE GROUP INC. (Respondents) RESPONDENTS OPRON MARITIMES CONSTRUCTION LTD. et ICS STATE, DIVISION DE THE STATE GROUP INC. (Intimées) INTIMÉES SNC-SNAM, G.P., a partnership between SNC- LAVALIN INC. and SNAMPROGETTI CANADA INC. v.

Opron Maritimes Construction Ltd. et al., 2011 NBCA 60 SNC-SNAM, S.E.N.C., société en nom collectif ayant comme associés SNC-LAVALIN INC. et SNAMPROGETTI CANADA INC., c.

OPRON MARITIMES CONSTRUCTION LTD. et autre , 2011 NBCA 60 CORAM: The Honourable Justice Turnbull The Honourable Justice Robertson The Honourable Justice Richard CORAM : L’honorable juge Turnbull L’honorable juge Robertson L’honorable juge Richard Appeal from a decision of the Court of Queen’s Bench: May 4, 2010 Appel d’une décision de la Cour du Banc de la Reine : Le 4 mai 2010 History of case: Decision under appeal: Unreported Preliminary or incidental proceedings: [2010] N.B.J. No. 219 (QL) [2010] N.B.J.

No. 221 (QL) Historique de la cause : Décision frappée d’appel : Inédite Procédures préliminaires ou accessoires : [2010] A.N.-B. n o 219 (QL) [2010] A.N.-B. n o 221 (QL)

Appeals heard: November 25, 2010 Appels entendus : Le 25 novembre 2010 Judgment rendered: July 14, 2011 Jugement rendu : Le 14 juillet 2011 Reasons for judgment: The Honourable Justice Richard Motifs de jugement : L’honorable juge Richard Concurred in by: The Honourable Justice Turnbull The Honourable Justice Robertson Souscrivent aux motifs : L’honorable juge Turnbull L’honorable juge Robertson Counsel at hearing: For the appellant: David M. Norman, Q.C. and Rodney E. Larsen For the respondents: David N. Rogers, for Opron Maritimes Construction Ltd. Andy W.

Lodge, for ICS State, a Division of The State Group Inc. Avocats à l’audience : Pour l’appelante : David M. Norman, c.r., et Rodney E. Larsen Pour les intimées : David N. Rogers, pour Opron Maritimes Construction Ltd. Andy W. Lodge, pour ICS State, division de The State Group Inc. THE COURT The appeals are allowed with one set of costs payable by Opron to SNC in the amount of $2,500. The decisions of the judge of the Court of Queen’s Bench are set aside and a new hearing is ordered. LA COUR Les appels sont accueillis et Opron est condamnée à verser à SNC des dépens de 2 500 $ payables en une seule masse.

Les décisions du juge de la Cour du Banc de la Reine sont annulées et la tenue d’une nouvelle audience est ordonnée. The judgment of the Court was delivered by RICHARD J.A. I. Introduction [ 1 ] These two appeals were heard together and raise common questions regarding the application of s. 7 of the Arbitration Act , S.N.B. 1992, c. A-10.1. This provision allows a court to stay proceedings in respect of a matter the parties had

agreed would be submitted to arbitration. One of the appeals raises a separate issue: whether a cross-claim is allowed in an action under the Mechanics’ Lien Act , R.S.N.B. 1973, c. M-6. [ 2 ] The questions arise out of a number of actions involving SNC-SNAM, G.P., ("SNC") and Opron Maritimes Construction Ltd., ("Opron") who had entered into a subcontract agreement (the “Subcontract”), which contained a dispute resolution clause requiring arbitration.

SNC sought to enforce that clause and have Opron’s proceedings stayed pending arbitration, but a judge of the Court of Queen’s Bench, in both a motion and an application, ruled the clause was not applicable in the circumstances. With leave, SNC appeals those decisions. It is now common ground that the basis upon which the judge excluded the application of the dispute resolution clause is no longer valid. For that reason, the judge’s decisions would normally be set aside.

However, this case raises a threshold issue, which is whether the judge’s decisions can be appealed to this Court, in light of s. 7(6) of the Arbitration Act , which provides that “[t]here is no appeal from the court’s decision.” For the reasons below, I conclude s. 7(6) has no application in this case and that the judge’s determinations that the dispute resolution clause does not apply are decisions that may be appealed.

I would allow both appeals and set aside the decisions and, in the circumstances of this case, I would order a new hearing. [ 3 ] Regarding the other issue, the judge of the Court of Queen’s Bench ruled that a cross-claim may be made in a mechanics’ lien action. In my view, that conclusion is correct. Amendments to the Mechanics’ Lien Act have brought the mechanics’ lien procedure more in line with proceedings under the Rules of Court , and cross-claims are no longer precluded under the Act or the jurisprudence.

The Rules contain safeguards to ensure judges can appropriately manage mechanics’ lien actions to ensure the object of the Act is respected. Moreover, the object of the Act is consistent with the object of the Rules : “to secure the just, least expensive and most expeditious determination of every proceeding on its merits” (Rule 1.03(2)). I would therefore dismiss this ground of appeal. II. Background [ 4 ] These matters arise out of a construction project at the Canaport LNG Terminal in Saint John. The essential facts are not disputed.

They are as follows. [ 5 ] Effective May 28, 2007, SNC entered into a Subcontract with Opron for the construction of a number of buildings.

The agreement contains a dispute resolution provision, which reads, in part, as follows: 36.0 DISPUTE RESOLUTION 36.1 Informal Procedures […] 36.2 Expert Action […] 36.3 Expedited Arbitration 36.3.1 If either Party desires to submit a Dispute to binding arbitration under this subsection 36.3, such Party shall deliver notice to the other Party, stating that such Party desires arbitration of the Dispute, setting forth a description of the nature and subject matter of the Dispute. 36.3.2 All Disputes that cannot be resolved pursuant to subsection 36.1 will be finally settled by three arbitrators pursuant to and in accordance with this subjection 36.3 and in accordance with the Rules of Conciliation and Arbitration of the London Court of International Arbitration in force at the date of the arbitration proceedings, which are deemed to be incorporated by reference into the

Subcontract. […] (

i) The agreement to arbitrate contained in this subsection 36.3 is specifically enforceable. […] 36.5 Excluded Disputes Notwithstanding anything to the contrary in the Subcontract, no Dispute or other matter that arises out of or relates to the Subcontract (and/or the transactions contemplated hereby) that involves a third person that has not agreed in writing to be bound by the Dispute Resolution Procedure under the Subcontract (which, for the avoidance of doubt, shall not include a Sub-subcontractor) shall be subject to or resolved (or continue to be subject to or resolved) in accordance with the Dispute Resolution Procedure. [ 6 ] In fulfilling its obligations under the Subcontract, Opron entered into sub-subcontracts with various parties (the "Lien Claimants") for the performance of work or provision of services and materials.

The work or provision of services and materials under the Subcontract eventually became the subject of various liens under the Mechanics’ Lien Act . In 2008, Opron brought an action against SNC, but, because of the dispute resolution clause contained in s. 36 of the Subcontract, the action was stayed pursuant to s. 7(1) of the Arbitration Act ( See 2008 NBQB 202 , [2008] N.B.J. No. 225 (QL) ). In 2009, eight Lien Claimants filed a claim of lien and commenced actions against Opron, SNC and others.

Seven of the eight actions have since settled, but one remains: the claim of ICS State, a division of The State Group Inc. (action S/C/272/09). [ 7 ] In each of the Lien Claimants’ actions, Opron filed a Statement of Defence, which included a cross-claim against SNC (the "cross-claims"). The Statements of Defence say that if Opron owes anything to the Lien Claimants, then Opron claims such sums from SNC.

As for the cross-claims, they allege that any delay in completing the project resulted in part from the negligence of SNC, or in the alternative that SNC requested and benefitted from the work of the Lien Claimants, but has not paid Opron for this work. As a result, Opron claims contribution or indemnity in respect of any sum the Lien Claimants may be entitled to recover against Opron. [ 8 ] In each case, SNC filed a Statement of Defence to Cross-Claim (form 27G) stating that:

(1) In an action under the Mechanics' Lien Act a party cannot include a counterclaim or cross-claim and the court has no jurisdiction to entertain such proceedings; and

(2) Section 36 of the contract between Opron and SNC provides for the resolution of disputes arising out of the contract between them to be resolved by final and binding arbitration. [ 9 ] Invoking s. 7(1) of the Arbitration Act , SNC applied, by Notice of Application, to strike out or stay Opron’s Cross-Claims on the following grounds: (1) a cross-claim is not available in a mechanics’ lien action; and, (2) any dispute between SNC and Opron must be resolved by the procedure stipulated in s. 36 of the Subcontract. [ 10 ] In July 2009, Opron commenced another action, claiming a lien under the Mechanics’ Lien Act , against SNC and others.

Against SNC, Opron alleged breach of contract and breach of trust and also claimed damages in negligence. SNC sought to have Opron discontinue its action against it and, when Opron did not reply to its request, SNC applied, by Notice of Motion, for a stay of proceedings under s. 7(1) of the Arbitration Act .

[ 11 ] On May 4, 2010, in oral decisions, a judge of the Court of Queen’s Bench dismissed both SNC’s motion and application. The judge’s unreported reasons for decision are reproduced verbatim since they provide the background to these appeals: SNC was the contractor for major construction at the Canaport terminal in Saint John. It entered into a subcontract with Opron. Opron in turn entered into sub-contracts with a number of sub-subcontractors.

One of those sub-subcontractors, Metcalf entered into sub-sub- subcontracts with – were more in the nature of agreements to purchase particular items with respect to small parts of that job. Those sub-sub-subcontractors were not parties to the prime contract or the contract between SNC and Opron or between Opron and Metcalf. Now there are a number of disputes between these parties and mechanics’ liens have been filed by the sub-sub-subcontractors, by the sub-subcontractors, and by the subcontractor Opron with respect to this SNC project at Canaport.

Against this background by notice of motion and by application in these actions, S/C/370/09 and S/M/61/09, SNC applies for a stay of these various mechanics’ lien actions brought by Opron and five sub-subcontractors and three sub-sub-subcontractors.

The legal basis for the application for a stay by SNC is found in section 7(1) of the Arbitration Act , which provides, if a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall on the motion of another party to the arbitration agreement stay the proceeding. As well, SNC points to the dispute resolution provisions of the contract between itself and Opron, which in

Article 36.1 and subsequent articles outlines the process of informal procedures, expert action, expedited arbitration and continuance of work at other points, including that the ( sic ) in

Article 36.3.2, all disputes that cannot be resolved pursuant to subsection 36.1 will be finally settled by three arbitrators pursuant to and in accordance with this subsection 36.3 and in accordance with the Rules of Conciliation and Arbitration of the London Court of International Arbitration in force at the date of the arbitration proceedings, which are deemed to be incorporated by reference into the subcontract 36.3.3, the following general provisions shall apply to an arbitration (

a) arbitration shall be conducted in the English language, and the seat of the arbitration shall be Montreal, Province of Quebec, Canada (

b) each party is responsible for the costs of its own experts’ evidence and legal counsel, but the parties shall share the cost and expenses of the arbitration equally, and that continues with some detail. Now against that background, SNC says that there is an arbitration clause between it and Opron. That section 7(1) of the Arbitration Act mandates the stay by the use of the word, shall. And that that’s a proper remedy in this difficulty. I would like to emphasize that the wording of section 7(1) deals with a proceeding in respect of a matter to be submitted to arbitration under the agreement.

When I look further in the arbitration agreement or the contract which provides an arbitration clause, I see

Article 36.5 says, excluded disputes. Notwithstanding anything to the contrary in the subcontract and no dispute or other matter that arises out or relates to the subcontract (and/or the transactions contemplated hereby) that involves a third person that has not agreed in writing to be bound by the dispute resolution procedures under the subcontract (which for the avoidance of doubt shall not include a sub- subcontractor), shall be subject to or resolved (or continue to be subject to or resolved) in accordance with the dispute resolution procedure. That’s an awkwardly worded paragraph.

But when I read that paragraph, which seems to say that the no dispute that involves a third party that is not agreed to be in writing to be bound by the dispute resolution procedure under the subcontract, which it doesn’t include a sub-subcontractor, shall be subject to or resolved in accordance with the dispute resolution procedure. I see that and I see here we have these several sub-sub-subcontractors who did not agree in writing to be bound by the dispute resolution procedure. Then I am left with the conclusion and reading that

Article 36 that this tangle of troubles includes matters which the parties SNC and Opron did not agree would be submitted to arbitration under the agreement. To the contrary they specifically excluded disputes involving sub-sub-subcontractors.

For these reasons, I have distinguished this situation from an earlier case involving another part of Canaport, SNC and Opron, where matters were not complicated by sub-sub-contractors. As well, SNC has argued that there should be a deeming that the contract between itself and Opron was in effect, it included and extended to the relationship between Opron and its sub-subs or between the sub-subs and the sub-sub-subs. In my view that is not an argument that stands against the clarity and the force of

Article 36.5. For these reasons, the motion and application by SNC for stays under section 7(1) of the Arbitration Act of the various mechanics’ lien proceedings are dismissed. Opron had made an argument in the alternative that [if] SNC was successful in getting a stay against them, or against Opron, that Opron should also achieve a stay against its sub-subs and sub-sub-subs.

It is not necessary to say anything further about that, as the SNC motions and application for stay, stays of the mechanics’ lien actions, the proceedings have failed because of the wording of 36.5. [ 12 ] With respect to SNC’s application in the matter involving the cross-claims, the judge added: On this application under S/M/61/09, SNC seeks a stay of various crossclaims made against it by Opron Maritimes Construction Inc. with regard to part of the Canaport facility. SNC entered into a construction contract with Opron. Opron entered into various subcontracts with other parties.

There are now a number of mechanics' lien actions that have arisen. In the various mechanics' lien actions that have arisen, Opron makes a crossclaim against SNC. The wording of those crossclaims in a typical one in the action involving Flynn Canada Ltd. is as follows: "Further or in the alternative, the defendant, Opron states that the defendant, SNC has requested and benefited from the work of the plaintiff, but has not paid the defendant Opron in respect of all of the work done by the plaintiff. The defendant, SNC is therefore in breach of contract and has been unjustly enriched.

The defendant, Opron further states that the aforementioned actions of the defendant, SNC constitute a breach of the contract between the defendant, SNC and the defendant, Opron.” The defendant, Opron, therefore claims against the defendant, SNC that it is entitled to indemnity, or in the alternative, contribution in respect of any sum which the plaintiff may recover against it on the grounds that the defendant, SNC's negligence and breach of contract caused or contributed to the delay that is alleged and alternatively on the basis that the defendant, SNC is in breach of contract for the failure to pay invoiced amounts related to the plaintiff's work and has been unjustly enriched as a result.

The classic rule in New Brunswick has been that mechanics' lien actions are not to be confused or complicated with counterclaims involving other subjects and other matters, other issues. There are cases such as Atlantic Paving make that point. However, the Mechanics' Lien in Section 43(1) also emphasizes that at the mechanics' lien trial, "at the trial of the action, the judge shall proceed to determine all questions that arise therein". And also that the court is faced with the responsibility to "adjust the rights and liabilities" of the claimants.

As I understand the issues that are before the court in this series of mechanics' liens disputes, the crossclaims are part of the questions that exist between the various parties and all relate to the disputed work and disputed provision of materials and forms the basis of the mechanics' liens. I don’t see them as comparable to separate counterclaims, but rather as integral to the process described by the court as the -- or described by the Act as a duty of the court to "adjust the rights and liabilities" of the various claimants.

The application by SNC to stay the crossclaims against it in the various mechanics' liens actions will be dismissed. Costs will be in the cause.

III. Issues on Appeal [ 13 ] SNC appeals the dismissal of both the motion and the application. With regard to the dismissal of the motion for a stay of proceedings in the matter of Opron’s action, SNC submits: (a) [The motion judge] erred in law in failing to stay the action of Opron pursuant to

section 36 of the Subcontract, which requires all disputes between the Appellant and Opron to be resolved pursuant to that

section of the subcontract; (b) [The motion judge] erred in law in refusing to stay the action of Opron pursuant to

section 7 of the Arbitration Act ; and (c) [The motion judge] erred in law or in mixed fact and law by misapprehending or misinterpreting the meaning of

section 36.5 of the subcontract by finding that Opron's action is an "excluded dispute" within the meaning of the subcontract and thus not subject to the mandatory arbitration provisions of the subcontract. [ 14 ] As for the dismissal of the application in the matter involving the cross-claims, SNC maintains: (a) [The application judge] erred in law in holding that cross-claims are permitted in actions commenced pursuant to the Mechanics' Lien Act , and thereby refusing to strike or stay the Cross-Claims of Opron against SNC; (b) [The application judge] erred in law in permitting the Cross-Claims to proceed despite

section 36 of the Subcontract, which requires all disputes between SNC and Opron to be resolved by arbitration; and (c) [The application judge] erred in law in refusing to stay the Cross-Claims pursuant to

section 7 of the Arbitration Act . IV. Position of the parties A. The stay of proceedings [ 15 ] SNC submits Opron had no right to commence an action against it because the Subcontract contains a dispute resolution provision for the settlement of their differences. When Opron failed to discontinue its action, SNC applied by Notice of Motion to have it stayed pursuant to s. 7(1) of the Arbitration Act , which reads as follows:

7(1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding. 7

(1) Si une

partie à la convention d’arbitrage introduit une procédure à l’égard d’une affaire qui doit être présentée à l’arbitrage en vertu de la convention d’arbitrage, la cour devant laquelle la procédure est introduite doit, sur demande d’une autre

partie à la convention d’arbitrage par voie de motion, suspendre la procédure. [ 16 ] SNC maintains the judge erred in relying on s. 36.5 of the Subcontract because, in Opron ’s action against SNC, none of the sub-subcontractors are involved. According to SNC, the application of the Arbitration Act and the

interpretation of s. 36 of the Subcontract raise questions of law in regard of which the standard of appellate review is correctness. SNC’s position is simple: the Arbitration Act mandates a stay of Opron’s action and the judge erred in law in failing to stay the action. The Subcontract states that all “Disputes” must be settled pursuant to the procedure stipulated in s. 36. According to SNC, the issues raised in Opron ’s Statement of Claim fall squarely within the definition of “Dispute”, which is defined in the Subcontract as follows: “Dispute” shall mean any dispute or disagreement between the Parties as to the

interpretation, application or administration of the Subcontract and/or the Work, the failure of the Parties to come to an agreement where agreement is called for under the Subcontract or the failure to come to an agreement within time specified or, if no time is specified, within a reasonable period of time; [ 17 ] In support of its position, SNC refers to cases where courts have stayed mechanics’ lien actions under s. 7 of the Arbitration Act, pending arbitration of the dispute. [ 18 ] SNC also submits the motion judge erred in his

interpretation of s. 36.5 of the Subcontract. SNC maintains “[t]he judge interpreted s. 36.5 to exclude from the mandatory arbitration provisions of the Subcontract any disputes involving third parties when in fact none of Opron’s sub-contractors are parties to the Opron action.” According to SNC, the judge was clearly wrong in relying on s. 36.5 in dismissing SNC’s motion. [ 19 ] With respect to the application for a stay in the matter that involves some of Opron’s subcontractors, SNC maintains the judge did not address its arguments when he ruled on that application.

SNC submits the issues between SNC and Opron are not the same as the issues between Opron and its own subcontractors, and argues that the dispute between SNC and Opron should be resolved via the dispute settlement mechanism contained in the Subcontract regardless of the situation between Opron vis-à-vis its own subcontractors. Moreover, SNC adds, the Subcontract required Opron to include a provision in any contract with its own subcontractors requiring them to be bound by the main provisions of the Subcontract.

According to SNC, Opron should not be relieved from its obligations under s. 36 of the Subcontract if it did not respect this requirement. [ 20 ] Replying to SNC’s argument, Opron submits the judge correctly interpreted s. 36.5 of the Subcontract but says the point is now moot because the factual underpinnings have fundamentally changed. As the parties advised us at the opening of the hearing of the appeal, each of the parties who might have triggered s. 36.5 of the Subcontract has settled its claim.

Recognizing there is no longer any basis for s. 36.5 to be applied, Opron submits the proper disposition is to dismiss the appeal and refer the case back to the Court of Queen’s Bench judge. [ 21 ] Opron points out that the Subcontract requires arbitration “except where… required by Law”. According to Opron , the law in New Brunswick “requires that matters be determined in the most just, expeditious and least expensive manner possible, avoiding a multiplicity of proceedings.” Opron therefore submits that the law requires all matters be determined by a judge of the Court of Queen’s Bench.

Opron adds it should not be subjected to the dispute resolution mechanism contained in the Subcontract because this could lead to inconsistent findings by different tribunals. [ 22 ] Opron submits that notwithstanding the wording of s. 7(1) of the Arbitration Act , which says the court “shall stay the proceeding”, the relief is nevertheless discretionary. Finally, Opron submits the appeal is precluded by operation of s. 7(6) of the Arbitration Act , which provides that “[t]here is no appeal from the court’s decision.”

[23] In reply to this last argument, SNC points to decisions from other courts of appeal that have held, in the face ofidentical provisions, that the bar created by s. 7(6) of the Arbitration Act, though at first blush seemingly absolute, does not alwaysoperate to prevent an appeal from a judge’s determination that an arbitration clause does not apply. B. The cross-claims [24] SNC maintains “[t]he law is well settled that a party in an action under the Mechanics’ Lien Act has no right tocounterclaim” and submits there is no material difference between a counterclaim and a cross-claim.

According to SNC, the“proscription against counterclaims in mechanics’ lien actions should apply equally to cross-claims” because a cross-claim is not aproceeding made available under the Mechanics’ Lien Act, and because to permit it in those types of actions would frustrate the object ofthe Act. [25] SNC acknowledges that the court’s jurisdiction in adjudicating an action commenced under the Mechanics’Lien Act is found in s. 43(1), which says the judge is “to adjust the rights and liabilities of the persons appearing before him or uponwhom the notice of trial was served”, but SNC claims the judge was wrong to interpret this provision liberally enough to allow cross-claims.

According to SNC, Atlantic Paving Co. Ltd v. Cameron Properties et al. (1956), (NB CA), 37 M.P.R. 271,[1955] N.B.J. No. 10 (C.A.) (QL) is the leading case with respect to the inability of a party to counterclaim, and it has been followed in anumber of other cases.

SNC argues the rationale that prevents a counterclaim from being advanced in a mechanics’ lien action shouldalso apply to a cross-claim: (1) the Act refers only to a Statement of Defence being filed; and, (2) the purpose of the mechanics’ lienlegislation is to provide trade workers with an expeditious mechanism to secure payment for work performed and services rendered. [26] In response, Opron claims “[t]here is no authority in this Province or elsewhere that a cross-claim forcontribution or indemnity is not available in an action commenced to enforce a mechanics’ lien.” According to Opron, there is afundamental difference between a counterclaim and a cross-claim.

Opron argues its cross-claims “simply reflect the reality that if thelienholders’ actions are valid, they relate in whole or in part to amounts for extras that SNC requested or required, but did not make therelated payment to Opron.” Thus, the argument continues, “[i]f a court accepts the lienholder’s claim that payment must be made forthose items, similarly Opron must receive those funds through SNC.” In Opron’s view, this reflects the intent of s. 43 of the Mechanics’Lien Act, which provides as follows: 43(1) At the trial of the action the judge shallproceed to determine all questions that arisetherein, or that are necessary to be tried todispose of the action completely and, subjectto

section 42, to adjust the rights andliabilities of the persons appearing before himor upon whom the notice of trial was served. 43(2) At the trial the judge shall take allaccounts, make all inquiries, give alldirections, and do all things necessary to tryand otherwise finally dispose of the actionand of all matters, questions and accountsarising in the action, and, subject to section42, to adjust the rights and liabilities of andgive all necessary relief to all parties to theaction or who have been served with thenotice of trial. 43(1) Lors du procès, le juge doit s’appliquerà régler toutes les questions qui y sontsoulevées, ou sur lesquelles il faut statuer afinde prononcer un jugement définitif surl’action et, sous réserve de l’article 42, àrégler les droits et obligations des personnesqui comparaissent devant lui ou qui ont reçusignification de l’avis du procès. 43(2) Lors du procès, le juge doit examinertous les comptes, faire toutes les enquêtes,donner toutes les directives et faire toutes leschoses nécessaires afin de juger l’action et destatuer sur toutes les affaires, questions etcomptes qui s’y rapportent, et, sous réservede l’article 42, régler les droits et obligations de toutes lesparties à l’action ou qui ont reçu significationde l’avis du procès et effectuer ledésintéressement nécessaire. [27] In sum, Opron says a cross-claim is not of the same nature as a counterclaim and a court should have todetermine whether Opron is entitled to indemnity or contribution for any damage it may have to pay a Lien Claimant, because the cross-claims “reflects the reality that payment for valid accounts comes from SNC as contractor of the project or from the security posted toreplace the lien.”

V. Analysis A . The stay of proceedings [ 28 ] In both the Notice of Motion in the matter of the action in which Opron is plaintiff, and the Notice of Application in the matter involving the cross-claims, in which both SNC and Opron are defendants, SNC sought a stay of Opron’s proceedings against it on the grounds that the dispute between those two parties was to be resolved as provided in s. 36 of the Subcontract. SNC maintains the judge ruled on this point only with respect to the Notice of Motion and did not address SNC’s arguments in the other case. That position is, with respect, untenable.

The judge’s reasons on the question of the stay of proceedings were clearly meant to apply to both matters.

The judge said that “SNC applies for a stay of these various mechanics’ lien actions brought by Opron and five sub-subcontractors and three sub-sub-subcontractors ”, and he ruled that “ the motion and application by SNC for stays under section 7(1) of the Arbitration Act of the various mechanics’ lien proceedings are dismissed ” (Emphasis added). [ 29 ] The judge refused to stay the action and the cross-claims on the sole ground that s. 36.5 of the Subcontract excluded disputes that involve a party, other than a sub-subcontractor, who has not agreed in writing to be bound by the dispute resolution procedure outlined in the Subcontract.

The judge held there were some “sub-sub-subcontractors” involved in some of the matters and concluded that, as a result, s. 7(1) of the Arbitration Act did not apply because s. 36.5 excluded this as a matter “to be submitted to arbitration under the agreement.” [ 30 ] SNC submits the judge erred in his

interpretation or application of s. 36.5 of the Subcontract. That may be, but, as Opron points out, the matter is now moot. The parties have advised us that the matters involving “sub-sub-subcontractors,” upon which the judge relied to exclude the dispute under s. 36.5, have been settled. Thus, there is no continued basis for any application of s. 36.5 of the Subcontract. This revelation can be considered fresh evidence on appeal, admitted by consent, and would normally be sufficient to set aside the judge’s decision on the question of the stay. There is, however, one potential obstacle to such a disposition.

It is the effect of s. 7(6) of the Arbitration Act , which says “[t]here is no appeal from the court’s decision.” [ 31 ] Section 7(6) must be considered in light of the object of the Arbitration Act, which is to give effect to the intentions of the parties in choosing to submit to arbitration. It must also be considered in context. In its entirety, s. 7 reads as follows: 7

(1) If a party to an arbitration agreement commences a proceeding in respect of a matter to be submitted to arbitration under the agreement, the court in which the proceeding is commenced shall, on the motion of another party to the arbitration agreement, stay the proceeding. 7

(2) However, the court may refuse to stay the proceeding in any of the following cases: (

a) a party entered into the arbitration agreement while under a legal incapacity; (

b) the arbitration agreement is invalid; (

c) the subject-matter of the dispute is not capable of being the subject of arbitration 7

(1) Si une

partie à la convention d’arbitrage introduit une procédure à l’égard d’une affaire qui doit être présentée à l’arbitrage en vertu de la convention d’arbitrage, la cour devant laquelle la procédure est introduite doit, sur demande d’une autre

partie à la convention d’arbitrage par voie de motion, suspendre la procédure. 7

(2) Cependant, la cour peut refuser de suspendre la procédure dans n’importe quel des cas suivants :

a) une

partie a conclu la convention d’arbitrage alors qu’elle se trouvait dans un état d’empêchement juridique;

b) la convention d’arbitrage est nulle;

c) le différend en question ne peut faire l’objet d’un arbitrage en vertu de la loi du Nouveau-Brunswick;

under New Brunswick law; (

d) the motion was brought with undue delay; or (

e) the matter is a proper one for default or

summary judgment. 7

(3) An arbitration of the dispute may be commenced and continued while the motion is before the court. 7

(4) If the court refuses to stay the proceeding (

a) no arbitration of the dispute shall be commenced, and (

b) an arbitration that has been commenced shall not be continued, and anything done in connection with the arbitration before the court made its decision is without effect. 7

(5) The court may stay the proceeding with respect to the matters dealt with in the arbitration agreement and allow it to continue with respect to other matters if it finds that (

a) the agreement deals with only some of the matters in respect of which the proceeding was commenced, and (

b) it is reasonable to separate the matters dealt with in the agreement from the other matters. 7

(6) There is no appeal from the court’s decision.

d) la motion a été faite avec un retard indû; ou

e) l’affaire est appropriée à un jugement par défaut ou un jugement

sommaire. 7

(3) L’arbitrage du différend peut être introduit et poursuivi pendant que la motion est devant la cour. 7

(4) Si la cour refuse de suspendre la procédure

a) l’arbitrage du différend ne peut être introduit, et

b) l’arbitrage qui a été introduit ne peut être poursuivi, et tout ce qui est fait en rapport avec l’arbitrage avant que la cour ne rende sa décision est sans effet. 7

(5) La cour peut suspendre la procédure à l’égard des affaires traitées dans la convention d’arbitrage et permettre la continuation à l’égard des autres affaires si elle estime

a) que la convention d’arbitrage ne traite que de certaines des affaires à l’égard desquelles la procédure a été introduite, et

b) qu’il est raisonnable de dissocier les affaires traitées dans la convention d’arbitrage des autres affaires. 7

(6) La décision de la cour est sans appel. [ 32 ] The legislative intent reflected in s. 7 is unambiguous: the court must stay a proceeding if the conditions in s. 7(1) are met, unless at least one of the criteria enumerated in s. 7(2) exists. If a motion judge stays a proceeding on the grounds the conditions in s. 7(1) are met, there can be no appeal from that decision. Similarly, if a motion judge concludes that at least one of the criteria contained in s. 7(2) is met, and, as a result, refuses to stay the proceeding, there can be no appeal from that decision.

Further, if a motion judge makes a determination under s. 7(5) of the Act , there can be no appeal from that decision either. In each of these instances, the motion judge would be exercising powers that are exclusively reserved for the Court of Queen’s Bench.

[33] I pause here to note that there is authority in other provinces for the proposition that s. 7(5) “supports theexistence of a discretion to refuse a stay where it is not reasonable to separate the matters dealt with in the agreement from the othermatters in dispute between parties”: Rosedale Motors Inc., v. Petro-Canada Inc., (ON SC), [1998] O.J. No. 5461(Gen. Div.) (QL), at para. 19. See also Hammer Pizza Ltd. v. Domino's Pizza of Canada Ltd., [1997] A.J. No. 67 (Q.B.) (QL), Radewychv. Brookfield Homes (Ontario) Ltd., [2007] O.J. No. 2483 (S.C.) (QL), aff’d 2007 ONCA 721, [2007] O.J.

No. 4012 (QL) and MacKay v.Applied Microelectronics Inc., 2001 NSSC 122, [2001] N.S.J. No. 342 (QL), paras. 21-36. In the latter of these cases, Stewart J.addresses the relevant arguments and concludes as follows: I do not interpret s. 9(5) [which reads as New Brunswick’s s. 7(5)] as limiting the discretion of the court so that in a situation wheregranting a partial stay is not reasonable, the Court's only alternative is to grant a full stay and proceed to arbitration rather than refusingthe stay request altogether.

The Court has discretion to refuse to stay altogether under s. 9(5) if granting a partial stay is not reasonable. [para. 36] [34] However, none of those circumstances arise in the present case: the judge did not stay the proceedings on thebasis of a finding that the conditions set out in s. 7(1) were met; he did not refuse a stay on any of the grounds listed in s. 7(2); and, he didnot make any determination under s. 7(5). Instead, he found, on the basis of s. 36.5 of the Subcontract, that there was no arbitrationagreement upon which the proceedings could be stayed.

In other words, he did not make any of the determinations he might be calledupon to make under s. 7 of the Arbitration Act. It follows that, since the judge’s decision falls outside the scope of s. 7 of the Act, s. 7(6)has no application. [35] Section 7(6) of the Arbitration Act, is not unique to New Brunswick. Other provinces have similar, if notidentical, legislation.

In Bristow, Glaholt, Reynolds and Wise, Construction Builders' and Mechanics' Liens in Canada, 7th ed., Vol. 2,looseleaf (Toronto: Carswell, 2005), the authors explain: In Alberta, Manitoba, New Brunswick, Nova Scotia, Ontario and Saskatchewan, if a party to an arbitration agreement commences courtproceedings in respect of a dispute falling under the arbitration agreement, the court shall, on the motion of another party to thearbitration agreement, stay the proceeding. These provinces have adopted the Uniform Law Conference of Canada’s model ArbitrationAct.

In these provinces with mandatory stay provisions, courts will stay lien actions despite arguments to the effect that arbitrationswould cause a multiplicity of proceedings, that the arbitrations would be long and complicated or that they would be unlikely to succeed.[Note that for this last proposition the decision cited in support is the one that is subject to the present appeal.] [p. 10-50,

section 10.14.2] [36] Other courts of appeal have had occasion to consider the effect of s. 7(6), and their reasoning is compelling. InHuras v. Primerica Financial Services Ltd., (ON CA), [2000] O.J. No. 3772 (C.A.) (QL), a plaintiff brought a classaction on behalf of people who had been involved in a training program without being paid. After completing the training program, theplaintiff had been hired on with Primerica and had signed agreements that contained an arbitration clause.

Primerica sought to have theaction stayed pursuant to s. 7(1) of the Arbitration Act, 1991, S.O. 1991, c. 17, but the motion judge dismissed the motion on the groundsthe arbitration clause was inapplicable during the training period. Primerica appealed. Invoking s. 7(6), the plaintiff brought a motion toquash the appeal. The motion was dismissed. For the Court, Finlayson J.A. explained: This issue is resolved by the findings of the motions judge that the period covered by the action was not governed by the BasicAgreement and the arbitration clause it contained.

While the record is not clear as to when the training period began and when theplaintiff commenced work under the three contracts that she signed, this was a matter to be resolved by the motions judge.

Section 7 governs the conduct of "a party to an arbitration agreement" (ss. 1). Subsection 2 provides for rulings as to the validity of aparticular arbitration clause. It is to be noted that in this case, as obiter, the motions judge found that this clause was "unconscionable".Unless these findings are interfered with on appeal, they are binding on the parties and control the avenue of redress of the dissatisfiedparty: see Borins J. in T1T2 Limited Partnership v. Canada (1994), (ON SC), 23 O.R. (3d) 66 (Gen.

Div.) at pp. 73-74: It follows that on a motion to stay an action on the ground that the subject matter of the action is precluded by an arbitration provision oragreement, the court of necessity must, and accordingly has the jurisdiction to, interpret the arbitration provision or agreement. ... Inother words, the court first must interpret the provision for the purpose of determining whether the action, to use the words of art. 8(1)

"is brought in a matter which is the subject of an arbitration agreement." ... It is only after the court has interpreted the arbitrationagreement and determined whether the subject matter of the action comes within the scope of the agreement that the court is able toaddress the issue of a stay. Other authorities at the General Division level have held to the same effect. Where there is no arbitration clause, the Arbitration Act,1991 has no application, or putting it another way, the dispute lies beyond the scope of s. 7.

It follows that if the court has decided thatthe Act is not applicable, then the prohibition against an appeal in s. 7(6) is equally not applicable: see Deluce Holdings Inc. v. AirCanada (1992), (ON SC), 12 O.R. (3d) 131 (Gen. Div.) and Simmons v. London (City), [1997] O.J. No. 3073 (Gen.Div.). Accordingly the appeal is not barred by s. 7 of the Arbitration Act but is permitted to this court if it is a final order of a judge of theSuperior Court of Justice: see s. 6(1)(

b) of the Courts of Justice Act. [paras. 8-11] [37] Declaring the arbitration clause inapplicable and invalid, Finlayson J.A. goes on to find that the decisionaffects a substantive right of Primerica and is therefore a final order, permitting appeal without leave. On that point, Huras wasexpressly followed in Housten v. Exigen (Canada) Inc. (2006), (NB CA), 299 N.B.R. (2d) 113, [2006] N.B.J. No. 53(C.A.) (QL). [38] The reasoning in Huras has been repeatedly applied in Ontario. In Brown v. Murphy, (ONCA), [2002] O.J.

No. 1545 (C.A.) (QL), Charron J.A. (as she then was) explained that “a decision by the motions court that a matter wasnot subject to arbitration under the terms of the arbitration agreement fell outside the scope of s. 7 and a right of appeal lay to this courtfrom that decision” (para. 8). In Griffin v. Dell Canada Inc., 2010 ONCA 29, [2010] O.J. No. 177 (QL), Sharpe J.A., for a five-memberpanel, referred to Huras and other cases that followed its reasoning, and held as follows: The Arbitration Act, s. 7(6) provides that "there is no appeal from the court's decision" on a stay application under the section.

It is nowwell-established that this provision does not preclude an appeal from an order refusing to grant a stay on the ground that the matter is notsubject to arbitration: Huras v. Primerica Financial Services Ltd. (2000), (ON CA), 137 O.A.C. 79 (C.A.); Mantiniv. Smith Lyons LLP (2003), (ON CA), 64 O.R. (3d) 505 (C.A.); Inforica Inc. v. CGI Information Systems andManagement Consultants Inc. (2009), 2009 ONCA 642 , 97 O.R. (3d) 161 (C.A.); Smith OCA 2008.

As the motion judge foundthat the matter was not subject to arbitration, on the authority of these cases, it follows that s. 7(6) does not bar an appeal to this court. [para. 25] [39] The Manitoba Court of Appeal has also had occasion to consider s. 7(6) of the Arbitration Act, C.C.S.M., c.A120, which is identical to s. 7(6) of the Ontario and New Brunswick Acts. In Hnatiuk v. Court, 2010 MBCA 20, [2010] M.J.

No. 52(QL), at paras. 26-35, Freedman J.A., for the Court, quoted the words of Charron J.A. in Brown and concluded that appellateintervention was, in some instances, permissible despite the “first blush” reading of s. 7(6). [40] The Ontario cases persuade me to conclude, as stated above, that if a motion judge stays a proceeding on thegrounds the conditions in s. 7(1) are met, there can be no appeal from that decision. Similarly, if a motion judge concludes that at leastone of the criteria listed in s. 7(2) is met, and, as a result, refuses to stay the proceeding, there can be no appeal from that decision.

Likewise, if a motion judge makes a determination under s. 7(5) of the Act, there can be no appeal from that decision.

On the other hand,if the motion judge holds there is no applicable arbitration agreement upon which the proceedings could be stayed, or, in other words, ifthe judge does not make any of the determinations he or she might be called upon to make under s. 7 of the Arbitration Act, then s. 7(6)cannot be successfully invoked to bar an appeal. [41] In the present case, the judge held the matters were not subject to arbitration because s. 36.5 of the Subcontractexcluded disputes involving sub-sub-subcontractors.

He did not, however, explain how this exclusion might be relevant to the action inwhich Opron is the Plaintiff. Nevertheless, whether or not he was right in his ruling is now of no moment. The admission of the partiesbefore this Court, that there is no longer any basis to apply s. 36.5 of the Subcontract, makes it clear the judge’s decision is now wrong.

The admission of the parties should be considered as “fresh evidence” admitted by consent, and, on the basis of that admission, Iconclude the judge’s decision must be set aside. [42] Opron submits the matters should be returned to the Court of Queen’s Bench judge because he only ruled with

respect to the application of s. 36.5 of the Subcontract and never considered Opron ’s other arguments. Moreover, Opron had filed its own motion arguing that, if the matters involving the cross-claims were to proceed by arbitration, the issues involving the sub- subcontractors should also be stayed in order to proceed to arbitration. On that motion, the judge held as follows: Opron had made an argument in the alternative that [if] SNC was successful in getting a stay against them, or against Opron, that Opron should also achieve a stay against its sub-subs and sub-sub-subs.

It is not necessary to say anything further about that, as the SNC motions and application for a stay, stays of the mechanics’ lien actions, the proceedings have failed because of the wording of 36.5. [ 43 ] The powers of the Court of Appeal, articulated in Rule 62.21(7) of the Rules of Court, allow us to set aside a decision appealed from and order a new hearing. In my view, this is a case for the exercise of that power.

When it enacted the Arbitration Act , the Legislature gave to the Court of Queen’s Bench the exclusive power to rule on whether the conditions laid out in s. 7(1) are met, whether a stay should be refused on any of the grounds listed in s. 7(2), and to make any determination that might be necessary under s. 7(5). The judge did not rule on those matters, just as he did not rule on Opron ’s own motion, which was also before him. I therefore conclude that the proper disposition of this matter would be to allow the appeal, set aside the judge’s decisions and order a new hearing of both the motion and the application.

B . The cross-claims [ 44 ] SNC argues that:

(1) Atlantic Paving stands for the proposition that counterclaims are not permitted in mechanics’ lien actions; and, (2) it necessarily follows that cross-claims ought to not be allowed. As I will explain below, it is not necessary to address these arguments because amendments to the Mechanics’ Lien Act make the decision in Atlantic Paving on this point no longer valid. I would add, however, that I do not agree with SNC’s contention that because counterclaims might not have been allowed the same would apply to cross-claims. [ 45 ] Cross-claims are very different from counterclaims.

Rule 29.01 of the Rules of Court , which governs cross- claims, provides that “[a] defendant may cross-claim against a co-defendant who is, or may be, liable to him for (

a) all, or any part, of the claim of the plaintiff, or (

b) any other relief relating to the subject matter of the main action ” (emphasis added). On the other hand, the scope of a counterclaim can be much broader. Rule 28.01(1) provides that “[a] defendant may assert, by way of counterclaim, any right or claim which he may have against the plaintiff.” Thus, a counterclaim is not limited to the subject matter of the main action. [ 46 ] My reason for not giving effect to this ground of appeal is that I do not believe Atlantic Paving properly reflects the current state of the law in this Province.

The Mechanics’ Lien Act has undergone significant changes since Atlantic Paving was decided in 1955. Those changes make that decision, on the question of counterclaims, no longer applicable. [ 47 ] Atlantic Paving involved a mechanics’ lien action relating to paving work undertaken in 1953.

Not only was the action defended, but the defendants also sought to advance a counterclaim against the plaintiff for (1) loss of business and profits caused by the plaintiff’s delay in completing the work; (2) injury and damage to the corporate defendant’s credit; and, (3) loss or depreciation in value of certain “paving work”. The plaintiff argued a counterclaim could not be advanced in the course of an action under the Mechanics’ Lien Act, R.S.N.B. 1952, c. 142.

With the concurrence of Richards C.J., Michaud C.J.Q.B. determined as follows: Now coming to the question of the right of the defendants in an action under the Mechanics' Lien Act to raise a counterclaim, while the matter is not too clearly defined or settled, I am of the opinion that while the defendants may be entitled to set off some matters against the claim of the plaintiff, his right does not extend to a counter-action or to what amounts to a cross-action. [para. 24] [ 48 ] In reaching that conclusion, Michaud C.J.Q.B. reviewed the provisions of the Act , including s. 35, which specifically mentioned that “the defendant may enter a defence by filing in the court a statement of defence” (para. 25) and noted that “ nowhere is there any mention of a right to counterclaim or bring a cross-action” (para. 26).

He also noted that the lien was “enforced in the County Court, […] by virtue of the Mechanics' Lien Act , which does not make all the procedure of the County Courts Act applicable” (para. 27), and he determined that “a matter in the nature of a set-off, which is a defence proper to the plaintiff's claim arising out of the subject-matter, could be considered, but not a cross-action in the nature of a counterclaim” (para. 27).

In the result, the defendants were not allowed to claim for loss of business and profits or for injury and damage to the corporate defendant’s credit, but were allowed to advance their claim for loss or depreciation because that claim related to the subject-matter of the lien action and were “properly matters

of defence or set-off” (para. 29). The evil Atlantic Paving wanted to prevent was having mechanics’ lien actions encumbered withclaims that did not relate to the subject-matter of the lien. [49] On several occasions, Atlantic Paving was applied as authority for the proposition that, in a mechanics’ lienaction, a defendant can claim a set-off provided it arises out of the same subject-matter as the lien, but there is no right to counterclaim: J.L. Simms & Sons, Limited v. Vigneron (1955), 19 N.B.R. (2d) 426, [1955] N.B.J. No. 1 (Q.B.) (QL), Lanier Construction Ltée v.

Noeland Noel (1982), (NB KB), 44 N.B.R. (2d) 513, [1982] N.B.J. No. 413 (Q.B.) (QL), Entreprises Croussette Ltée v.St-Onge (1983), (NB KB), 50 N.B.R. (2d) 414, [1983] N.B.J. No. 325 (Q.B.) (QL), Jenkins Insulators & AcousticsLtd. v. Marteau (1985), (NB KB), 66 N.B.R. (2d) 297, [1985] N.B.J. No. 64 (Q.B.) (QL), David T. Williams Ltd. v.Green, [1990] N.B.J. No. 955 (Q.B.) (QL), Jean v. Diamond (1996), (NB KB), 180 N.B.R. (2d) 313, [1996] N.B.J.No. 357 (Q.B.) (QL) and AMEC Americas Ltd. v.

AV Nackawic Inc., 2009 NBQB 42, 345 N.B.R. (2d) 201. [50] The effect of this rule is that if the amount of the set-off is greater than the quantum of the plaintiff’s claim, thedefendant will not be able to recover the excess in the mechanics’ lien action and will be required to bring a separate proceeding. This isillustrated in Jean v.

Diamond, where McIntyre J. pointed out that “the damages resulting from poor workmanship in the nature of costsand expenditures made to correct defects in workmanship are properly matters of defence or set-off and that they will well exceed theamount of the holdback [which was the value of the plaintiff’s claim]” (para. 11). He noted that the counterclaim could not beconsidered and, as a result, simply dismissed the plaintiff’s claim. [51] In David T. Williams Ltd. v.

Green, Dickson J. pointed out this effect and stated that if the damages claimed inthe counterclaim, in that case, had exceeded the plaintiff’s entitlement on his claim, he would have, “particularly in view of the present s.43 of the Mechanics’ Lien Act, [had] no hesitation in allowing the overplus as a judgment in the defendant’s favour”. [52] When Atlantic Paving was decided in 1955, the Mechanics’ Lien Act made reference to adopting “the ordinaryprocedure” of the County Court, “except where the same is varied by this Act” (s. 32(1)).

The Mechanics’ Lien Act contained a specificprocedure for filing a statement of claim and a statement of defence. It was one that the Court held “varied” the usual procedure used inthe County Court. The procedure set out in the Act did not make any mention of counterclaims or cross-actions.

It provided as follows: 33 An action shall be commenced by filing in the court a statement of claim, entitled in the court and cause, giving grounds andparticulars of the claim, verified by affidavit, and a copy of the statement of claim shall be delivered to the owner, or his agent, and suchdelivery may be effected either within or without the province. […] 35(1) Within twenty days after service upon him of the statement of claim, the defendant may enter a defence by filing in the court astatement of defence showing the nature of his defence, and by serving on the plaintiff or his solicitor a copy thereof.

(2) If the defendant fails to enter a defence within the time specified in subsection (1) he shall, unless otherwise ordered by a judge, beprecluded from disputing the plaintiff's claim and right to a lien, and the plaintiff shall have the right to sign interlocutory judgmentagainst the defendant.

(3) A defendant in default may, in a proper case, by order of the judge, be allowed to defend upon such terms as the judge shall thinkjust. [53] In the Mechanics’ Lien Act, R.S.N.B. 1973, c. M-6, this particular procedure for mechanics’ lien actions wasretained: see ss. 33 – 43. In 1979, the Act was amended by

An Act to Provide for the Merger of the Supreme and County Courts of NewBrunswick, S.N.B. 1979, c. 41, s. 77, and it was again amended in 1980 when the Supreme Court became the Court of Queen’s Bench: S.N.B. 1980, c. 32, s.20. From 1980 to date, s. 33 of the Act provides as follows:

33 A lien may be enforced by action in the court, according to the ordinary procedure of that court, except where the same is varied by this Act. 33 Le privilège peut s’exercer par voie d’action intentée devant la cour, conformément à la procédure ordinaire de cette cour, sauf lorsqu’elle est modifiée par les dispositions de la présente loi. [ 54 ] Since 1980, “Court” is defined as “The Court of Queen’s Bench of New Brunswick” and since 1982, the procedure in that Court is as provided in the Rules of Court , being Regulation 82-73 under the Judicature Act and the Provincial Offences Procedure Act, S.N.B. 1987, c.

P-22.1. Until 2002, however, the procedure for filing claims and statements of defence in mechanics’ lien actions remained as set out in the Mechanics’ Lien Act . [ 55 ] In 1992, the Legislature adopted An Act to amend the Mechanics’ Lien Act , S.N.B. 1992, c. 84, which repealed a number of sections, including ss. 34 to 37 , which lay out the procedure for filing claims and statements of defence. On March 28, 2002, the 1992 amendments were proclaimed to come into force June 1, 2002.

The purpose of these amendments is, without doubt, as stated in the Department of Justice Law Reform Notes, “to remove some outdated provisions, and to bring the mechanics' lien procedure more into line with other proceedings under the Rules of Court ”: See Department of Justice, Law Reform Notes , #15, September 2001, and #16, April 2002. [ 56 ] Until now, only one reported case has considered the effect of the 1992 amendments on the precedential significance of Atlantic Paving . In AMEC Americas Ltd. , Russell J. entertained a motion to strike out a defendant’s counterclaim in a mechanics’ lien action.

He reasoned that although “one might be tempted [because of the repeal of certain provisions of the Act ] to say the ordinary procedure [now] permits a counterclaim”, “[t]he Act is designed […] to provide expeditious relief usually to trades people” and that a “counterclaim which may relate to a completely different subject matter from the mechanics’ lien claim could foil the intent of the Act by delaying the Plaintiff interminably.” He therefore ruled that “until the legislature specifically allows a counterclaim, as it did in Ontario, a counterclaim should not be permitted in this mechanics’ lien action” (para. 10). [ 57 ] With great respect, I do not agree that the precedential value of Atlantic Paving on the matter of counterclaims survives the 1992 amendments.

In my view, one of the effects of the 1992 reform is to allow counterclaims in mechanics’ lien actions. [ 58 ]

Section 33 of the Mechanics’ Lien Act says that “[a] lien may be enforced in the court, according to the ordinary procedure of that court, except where the same is varied by the Act ”. There is no longer anything in the Act that can be said to vary the ordinary procedure of the Court of Queen’s Bench. In repealing some of the procedural provisions of the Act , the Legislature nevertheless retained s. 43(1), which provides that “[a]t the trial of the action the judge shall proceed to determine all questions that arise therein, or that are necessary to be tried to dispose of the action completely and, subject to

section 42, to adjust the rights and liabilities of the persons appearing before him or upon whom the notice of trial was served.” It also retained s. 43(2), which requires the judge to attempt to “finally dispose of the action and of all matters, questions and accounts arising in the action, and subject to

section 42, to adjust the rights and liabilities of and give all necessary relief to all parties to the action or who have been served with the notice of trial.” However, s. 61(2) was repealed. It provided as follows: 61

(2) The object of this Act being to enforce liens at the least expense, the procedure shall be, as far as possible, of a

summary character having regard to the amount and nature of the liens in question. [Emphasis added.] 61

(2) Le but de la présente loi étant d’assurer l’exercice des privilèges avec le minimum de frais, la procédure doit être, autant que possible, d’un caractère

sommaire, compte tenu du montant et de la nature des privilèges en question. [Je souligne.] [ 59 ] It appears obvious to me that the intent of the 1992 amendments was to make the procedure provided in the Rules of Court applicable to mechanics’ lien actions so that judges would follow that procedure in fulfilling their mandate under s. 43 of the Act . With the repeal of the provisions that had been found to vary the “ordinary procedure of the court,” there is no longer any statutory impediment to making a counterclaim or a cross-claim in a mechanics’ lien action.

This is not to say, however, that the purpose of the Mechanics’ Lien Act changes. The 1992 amendments simply reflect the reality that the object of the Act can be attained within the

parameters of the ordinary procedure provided in the Rules of Court . After all, the purpose of the Act is not much different than the stated purpose of the Rules : “to secure the just, least expensive and most expeditious determination of every proceeding on its merits” (Rule 1.03(2)). [ 60 ] The “ordinary procedure” of the Court of Queen’s Bench, as provided in the Rules of Court , allows counterclaims, cross-claims and third party claims.

That is not to say, however, that courts will allow such proceedings to frustrate the object of the Mechanics’ Lien Act or the right of a lien claimant to expeditious and cost-effective justice. The Rules provide judges with an arsenal of weapons by which cases can be properly managed to ensure the object of the Act is attained. In each of the rules that govern counterclaims, cross-claims and third party claims, there is provision for a judge to order that those proceedings be tried separately from the trial of the main action: Rules 28.06, 29.08 and 30.09(1).

Moreover, Rules 28, 29 and 30 provide much flexibility. For example, in the case of a counterclaim, a judge can order separate trials or can even strike out the counterclaim without prejudice to the right of the defendant to assert the claim in a separate action, “[w]here it appears that a counterclaim may unduly complicate or delay the trial of the main action, or cause undue prejudice to a party” (Rule 28.07(1)).

As for a cross-claim or a third party claim, the court may direct that such a proceeding be a separate action, where such terms do not cause injustice to other parties (Rules 29.10 and 30.11). [ 61 ] In Construction Builders' and Mechanics' Liens in Canada , the learned authors explain that in some provinces the Acts specifically provide for set-off and counterclaims, while, in other provinces, provisions that are similar to our s. 43 “would appear to include the power to adjudicate upon claims for set-off and for counterclaim” (p. 10-31,

section 10.11). New Brunswick apparently stood alone in holding that a defendant had no right to counterclaim in a mechanics’ lien action. In my view, the 1992 amendments were meant to remedy this state of affairs and to allow more flexibility in these types of actions. The amendments simply recognize the flexibility in the Rules of Court for judges to apply, where necessary, appropriate safeguards to attain the object of the Mechanics’ Lien Act and fulfill their duties under s. 43. [ 62 ] The learned authors also report that four provinces expressly allow third party proceedings in lien actions (p. 10-36,

section 10.12). In Ontario, for example, the court can grant leave to add third parties and it is stated that before granting leave “the court must be satisfied that doing so would not unduly delay or complicate the plaintiff’s action” (p. 10-37,

section 10.12). The effect of the 1992 amendments to the New Brunswick Act is to allow third party proceedings, and let the judge determine, if necessary, whether to grant relief to ensure that a plaintiff is not unnecessarily prejudiced or delayed because of a claim against a third party. [ 63 ] In my view, the 1992 amendments to the Mechanics Lien Act sought to remedy situations where a narrow

interpretation of Atlantic Paving might create unfairness and result in multiple proceedings. As pointed out, this was the case in Jean v. Diamond , where the court held that the damages suffered by the defendants would well exceeded the amount of the plaintiff’s claim, but all the judge could do was apply a set-off. In David T. Williams Ltd. v. Green , Dickson J. expressed a willingness to depart from such a narrow

interpretation of Atlantic Paving , and, two years later, the Legislature adopted

An Act to amend the Mechanics’ Lien Act. The message is clear: allow the flexibility of the Rules of Court to govern these types of actions. [ 64 ] In sum, since June 1, 2002, Atlantic Paving no longer stands as authority to prevent counterclaims in mechanics’ lien actions. Counterclaims, cross-claims and third party claims are governed by the Rules of Court , which, by virtue of s. 33 of the Act , apply to mechanics’ lien actions.

These rules all have safeguards to ensure judges stand as guardians against unscrupulous parties who may attempt to foil the objects of the Act by bringing claims that are unrelated to the subject-matter of the main action or which would unduly complicate or delay the matter. [ 65 ] For these reasons, I would dismiss this ground of appeal. In my view, the application judge was correct in holding that s. 43(1) empowers him “to determine all questions that arise” in the action, and that this provision allowed him to entertain a cross-claim.

Whether the one remaining cross-claim could be said to require an order that it be tried separately is a question that does not appear to have been before the court and upon which I, therefore, express no opinion. VI. Disposition [ 66 ] I would allow the appeals, set aside the decisions of the Court of Queen’s Bench refusing to stay Opron’s action and cross-claim and order a new hearing of both the motion and the application. I would allow SNC one set of costs, which I would fix at $2,500.00, to be paid by Opron.

_____________________________ J. C. MARC RICHARD, J.A. WE CONCUR: ________________________________ WALLACE S. TURNBULL, J.A. ________________________________ J.T. ROBERTSON, J.A.